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The national average price of regular unleaded gasoline rose slightly from last week, hitting $3.20 per gallon, up about a penny. That is also about two pennies cheaper than the price one year ago. In other words, the price at the pump is barely moving, giving drivers some predictability about the cost of coming fill-ups. Diesel is little changed, too. We look for fuel prices to mostly tread water in coming weeks, but to tick down a bit later in the fall. Most years see gas prices retreat in late autumn as seasonal demand wanes, with the low point often coming sometime around Christmas or in January. There is no guarantee that this pattern will play out again this year, but right now, it looks like a good bet.
The main reason that gas and diesel prices are holding steady is that crude oil has been trading in a very narrow range. Benchmark West Texas Intermediate crude recently traded at about $63, close to where it has been in recent weeks. We look for it to continue in the low to mid-$60s this fall, unless some sudden geopolitical crisis erupts in the Middle East or another key oil-exporting region.
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Natural gas prices are also not moving much, with the benchmark gas futures contract hovering around $3 per million British thermal units. The weather in much of the United States has been mild, keeping gas demand low. Heat waves have been relatively rare, reducing demand for gas to keep power plants running, while there has also been little in the way of chilly weather that might prompt furnaces to kick on. Until long-term forecasts start showing the approach of colder temperatures, natural gas prices are likely to stay low. There is a bit more gas in underground storage now than normal for this time of year, and that supply cushion should keep building up for a while yet. Eventually, the arrival of winter will start to draw down gas in storage, and if the season proves colder than normal, that could give prices a lift.
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